Why is the Array Modifier offsetting this object by 1 in the Z axis when the Z field says 0?
You have rotations and scaling settings that are interfering with the Array modifier. 

Press Ctrl + A with the object selected in Object Mode and click on Scale in the menu that comes up to set the default scale of your object to its current size, and repeat this with Rotation to set the current rotation of your object to the default rotation.